Tribunal rules in favor of appellant, not liable for service tax under 'commercial training or coaching' service

The Tribunal ruled in favor of the appellant, holding that they were not liable for service tax under 'commercial training or coaching' service as MAAC had already paid the tax. The Tribunal emphasized the revenue-sharing arrangement between the parties and concluded that the appellant acted as an instrument in the training program managed by MAAC. The decision was based on previous rulings and the nature of the revenue-sharing agreement, leading to the setting aside of the Commissioner (Appeals) order in favor of the appellant.

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Issues:
Demand of service tax under 'commercial training or coaching' service for the period from April 2009 to March 2010 and April 2010 to March 2011, based on two show cause notices. Allegation that the appellant was rendering 'commercial training or coaching' service to students and liable to pay service tax on the amount received. Claim that the service tax paid by Maya Academy of Advanced Cinematics (MAAC) does not absolve the appellant from paying service tax.

Analysis:
The appellant, engaged in providing computer education in Animation and Cinematics, entered into a Business Partner Agreement with MAAC. The agreement outlined responsibilities of both parties, with MAAC providing course material, training, and conducting audits, while the appellant marketed the courses, collected fees, and provided premises and computers. The agreement required the appellant to collect the entire fee from students and deposit it in MAAC's account, with MAAC remitting 80% of the net amount back to the appellant. The appellant operated from premises included in MAAC's Service Tax registration, with MAAC paying service tax on the full amount collected from students.

A show cause notice in 2010 proposing service tax demand was dropped as MAAC had already discharged the tax liability. However, subsequent notices in 2011 alleged the appellant provided 'commercial training or coaching' service and was liable for service tax, separate from MAAC's 'franchise' service. The Additional Commissioner confirmed the demand in 2012, upheld by the Commissioner (Appeals) in 2018, leading to the current appeal.

The appellant argued that previous Tribunal decisions favored them, emphasizing that MAAC had discharged the service tax liability, absolving the appellant from further tax payment. They highlighted the revenue-sharing nature of the agreement and the absence of consideration received directly from students. The department, however, supported the impugned order, stating no interference was warranted.

The Tribunal held in favor of the appellant, citing the previous decision in Samadhan Systems that the appellant was not liable for service tax under 'commercial training or coaching' service, especially when MAAC had already paid the tax. The Tribunal noted the revenue-sharing arrangement between the parties and emphasized that the appellant acted as an instrument in the training program managed by MAAC. Additionally, referencing another case, the Tribunal concluded that service tax could not be levied on the appellant due to the revenue-sharing basis of the arrangement.

In conclusion, the Tribunal set aside the Commissioner (Appeals) order, ruling in favor of the appellant based on the previous decisions and the nature of the revenue-sharing agreement between the appellant and MAAC.

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